Smart Money: Maine and nursing home care

Maine has a ‘42’ problem. The average age of its citizens is about 42, which means that half the population is older than that, with a rapidly rising population 85 and older.

The other 42 problem is Maine’s density. Our population density is about 42 people per square mile, compared to, say, Massachussetts at 840 people per square mile, or even New Hampshire at 147 people per square mile.

So we have a lot of empty space, and a lot of aging people, who don’t make a whole lot of money.

This all becomes a problem when we start talking about how many hospitals and nursing homes we need, and where, and how they should be paid for. Obviously, our frail elderly need nursing home care, or something like nursing home care, but rural nursing homes can’t make a go of it because they don’t have enough patients and because the state hasn’t been paying its bills on time. In Maine, it can cost close to $100,000 per year to be in a nursing home.

People who work in nursing homes require training, and it is difficult to attract people to work in the back of beyond without paying them a living salary. The average salary of a certified nursing assistant — the people who do most of the work in nursing homes — in Maine is $22,000, far below the state’s average family income. Those who work in smaller facilities in rural areas make even less. There have to be at least three shifts of CNAs at any nursing home, although the overnight 11-7 shift can consist of fewer people.

Maine nursing homes are smaller than the national average, and have more dementia patients in them, which means that per capita, there are more staff members in Maine nursing homes than in other parts of the country.

So how does it all work? How does a family earning the median average of $46,000 per year (or less if they happen to work as CNAs) afford to pay for Great Aunt Margaret’s nursing home stay?

The answer is, they don’t. Margaret pays what she can from her savings (unless she placed it in trust more than five years ago), and then Medicaid picks up the cost. Medicare may pay a small portion of the cost if she was transferred from a hospital directly to the nursing home.

When Aunt Margaret dies, the state may attempt to recoup its costs from her estate. Unless Uncle Fred is still living in the home they owned together, the house may be sold to pay for some of the costs. If she had art collections, jewelry, or other items, the state can also force their sale. To get around these issues, many people are creating trusts well in advance of any expected need for MaineCare services, to pass estates to the next generation.

And that means that taxpayers foot the bill.

Medicaid, or as it is called in Maine, MaineCare, is a federal/state partnership. For most ordinary care, the federal government picks up about 62 percent of the costs, but for child health, native American health clinics, public health issues (TB, for example) and other things, the feds pick up a larger percentage ... about 73 percent.

States are allowed to set provider reimbursement rates. For senior care, there are basically three levels of care. The first, independent living, is essentially a retirement community as seniors downsize and want to have less maintenance to do (such as the Highlands). This is typically not covered by MaineCare. However, while in an independent living situation, a resident may begin to need additional help. Some programs, like the Highlands, have the second level built into their programs.

The second level of senior care is “assisted living”. MaineCare pays about $3,000 per month for assisted living reimbursement, the kind of care one might get at, say, the Plant Home, where patients are mostly ambulatory, can mostly feed themselves and take care of other personal needs, but may need assistance standing up, reminders to take medication, keeping track of doctor appointments, have meals prepared for them, bathing and minor assistance dressing, and so on. The average payment for someone not on Medicaid at the same facility would be $6,500. The Plant Home is well aware that it needs to have new market based housing options for wealthier seniors, and this year, got its proposal for a new facility passed through the Bath Planning Board and City Council. As a nonprofit, most of the building costs were covered by grant funds; however, the project is now on hold pending a market analysis.

The most intensive type of senior care is skilled nursing, which might or might not include a memory component. (Maine has a large number of elderly people with dementia, which requires specialized care.) For long-term skilled nursing care, the average MaineCare reimbursement is about $1,000 less per month than the average market rate of about $8,300 per month, and therefore, the market rate must increase for private patients, causing them to use up their available assets more quickly and becoming eligible for Medicaid that much more quickly. Nearly 2/3 of all nursing home patients are covered by MaineCare, but because they pay less, two issues have been occurring. First, the cost to private pay patients is rising faster than ever and second, some nursing homes are choosing not to accept MaineCare patients at all, or are limiting the number of MaineCare patients they will accept.

But when nursing homes have high percentages of MaineCare patients, the cost-shifting from market payers to the impoverished seniors on MaineCare isn’t even possible. That’s what happened to the Atlantic Nursing and Rehabilitation Center in Calais in 2012, when it had to shut its doors, transferring many frail elderly people to other nursing homes many miles away. Low reimbursement is also the reason why the Pittsfield Rehab and Nursing Home plans to shut its doors in September, saying it is losing $15 for every patient.

The closing of Atlantic Nursing made an impact on the Legislature, and this year, they acted to give nursing homes a raise by enacting LD 1776 (which went into effect without the governor’s signature on May 1). The bill, still technically a study, acts to change the way nursing comes are compensated.

The law says that the department shall establish rules concerning reimbursement that take into account the costs of providing care and services in conformity with applicable state and federal laws, rules, regulations and quality and safety standards, are reasonable and adequate to meet the costs incurred by efficiently and economically operated facilities, and contain an annual inflation adjustment that recognizes regional variations in labor costs and uses the inflation factor established by a national economic research organization selected by the department to adjust costs other than labor and fixed costs.

The Legislature also made sure that the nursing homes got more money, in advance of the study, for this year and next. Nursing homes will be getting more than $25 million this year for Medicaid patients.

But more needs to be done to improve the health of nursing homes and expand the choices of seniors. Small, rural nursing homes may not be able to compete in the marketplace, a circumstance that will mean that seniors must be housed far from home.

Or, possibly at home. The cost of two CNAs to cover the morning and afternoon shifts for a person who needs round the clock care is less than what a patient pays to go into a nursing home, even on MaineCare. If a family member can cover a third shift ... for instance, the spouse takes care of any overnight needs ... a patient would be able to live out his or her life at home for much less than the cost of nursing home care. With respite care and other assistance, it may still be cheaper to be at home, unless the patient regularly needs interventions that a CNA would be unable to provide.

The Department of Health and Human Services is beginning to consider these as viable options, but far more has to be done. The cost of home caregivers should be weighed against the cost of an entire nursing home stay. We as a state need to think outside the box. Visiting nurses and teams of CNAs are one solution; for less impaired people, local day centers in every town’s senior center where physical, emotional, and mental needs can be met is another.

If we live long enough, we’ll all face this reality at some point. The time is now to create a humane but affordable network of elder care that we can all live with.